Weekly Feed Market Commentary
Published 19 November 14
UK May-15 feed wheat futures gained strongly through last week, closing on Tuesday (18 November) at £131.25/t, up £5.25/t from the previous Tuesday. In contrast, Paris Mar-15 maize futures climbed only €1.25/t to €153.75/t over the same time. Sterling falling consistently against the Euro over the period, losing nearly 2% of its value, was a key driver of the greater gains in UK feed wheat values.
A number of weather issues re-emerged in global grain markets over the past week, adding upward pressure to UK feed wheat futures. Cold and snowy weather across the US Midwest is set to continue throughout this week, raising fears of damage to winter wheat crops and lower yields if plants are pushed into dormancy earlier than usual. Similarly, cold and dry weather in parts of Russia and Ukraine may damage later planted wheat. With Australia’s harvest getting underway, production issues from the dry spring in South Australia are also coming to light. Although these are not as significant as those in some previous years, heavy rainfall in Western Australia is increasing concerns over the quality of wheat and barley.
Results from the Early Bird Survey of planting intentions for 2015 suggest a 5% reduction to the wheat area in the UK. Winter and spring barley, pulse and fallow areas are estimated to be higher on the year, potentially showing the impact of the 3-crop rule on planting decisions. Going on previous results, the survey gives a good intention of areas for key autumn sown crops in the UK.
The latest trade data published by HMR&C revealed that although UK wheat exports in September increased by 21Kt compared with August’s figures to 150Kt, the UK remained a net wheat importer. Maize imports also remained relatively high, suggesting that despite the large domestic wheat crop, maize will continue to be a key competitor for animal feed demand.
Hi-Pro soyameal prices (Ex-store East Coast, November delivery) were up £2/t on the week to last Friday at £350/t. Rapemeal prices (Ex-mill Erith, November delivery) followed these gains, up £2/t to £170/t. GB soyameal prices are currently at a 5 month high, with strong soyameal demand in the US driving prices.
Accumulated US soyameal export commitments (outstanding sales plus accumulated exports) as of November 6 stood at 6.3Mt, ahead of the 5.2Mt committed by the same point in time in 2013/14. Reports of both South American soyameal and European rapemeal being shipped to the US recently, have meant that Chicago soyameal futures have begun to slip in the past few days.
While gaining some strength from soyameal markets, spot GB rapemeal values now equate to 49% of soyameal values, compared to 61% in mid-June. This suggests there is increased incentive for GB animal feed rations to include more rapemeal, where technical limitations allow.
According to the Early Bird Survey, the first snapshot view of planting intentions for harvest 2015, the UK oilseed rape area is seen down 4%, at 649Kha. This projected area is below the previous five-year average (698Kha) and would be the lowest since 2010. Lower rapeseed prices are among the factors behind the decline, as they were with the expected 5% decline in the German rapeseed area reported last week.
Figures and commentary provided in association with HGCA and BPEX.
For further information on the cereals market click here to link through to HGCA website.